The document compares the financial ratios of PepsiCo and Coca Cola for the years 2012 and 2013. It analyzes several key ratios including current ratio, quick ratio, inventory turnover, gross profit ratio, net profit ratio, debt equity ratio, asset turnover ratio, and equity turnover ratio. For most ratios, PepsiCo performed better than Coca Cola in 2013, though Coca Cola had higher gross profit and net profit ratios. The document provides definitions and calculations for each ratio.

1. FINNANCIAL
RATIO ANANLYSIS
PEPSICO INC vs COCA COLA

2. YEAR
Current Assets
(In USD Billion )
Current Liabilities
(In USD Billion )
Current Ratio Current Assets
(In USD Billion )
Current Liabilities
(In USD Billion )
Current Ratio
2013 22.14 17.84 1.24 31.3 27.81 1.13
2012 18.63 17.09 1.09 30.33 27.82 1.09
Current
Ratio
Quick
Ratio
Inventory
Turnover
Current Ratio = Current assets
Gross
Profit
Net Profit
Current liabilities
Debt
Equity
Asset
Turnover
Equity
Turnover
Current Ratio:
1. Is a popular tool to
evaluate the ability of a
business to pay its short-term
obligations payable
within a short period of
time, usually one year.
2. A ratio of 2:1 or higher is
considered satisfactory for
most of the companies
1.3
1.25
1.2
1.15
1.1
1.05
1
2012 2013
PEPSICO
COCA COLA

3. YEAR
Current
Assets (In
USD Billion)
Current
Liabilities (In
USD Billion)
Inventory
(In USD
Billion)
Quic
k
Ratio
Current
Assets (In
USD Billion)
Current
Liabilities(In
USD Billion)
Inventory
(In USD
Billion)
Quick
Ratio
2013 22.14 17.84 3.58 1.04 31.3 27.81 3.28 1.01
2012 18.63 17.09 3.41 0.89 30.33 27.82 3.26 0.97
Current
Ratio
Quick
Ratio
Inventory
Turnover
Gross
Profit
1.1
1.05
1
0.95
0.9
0.85
Net Profit
Debt
Equity
Asset
Turnover
Equity
Turnover
Quick Ratio:
1. is used to test the ability of a
business to pay its short-term
debts.
2. It measures the relationship
between liquid assets and
current liabilities. Liquid
assets are equal to total
current assets minus
inventories and prepaid
expenses
0.8
2012 2013
PEPSICO
COCA COLA
Quick ratio = Liquid assets
current Liabilities

4. YEAR
Sales (In USD
Billion )
Inventory (In USD
Billion )
Inventory
Turnover Ratio
Sales (In USD
Billion )
Inventory (In
USD Billion )
Inventory
Turnover Ratio
2013 66.42 3.58 18.6 46.7 3.28 14.238
2012 65.49 3.41 19.2 48.07 3.26 14.745
Current
Ratio
Quick
Ratio
Inventory
Turnover
Gross
Profit
25
20
15
10
5
Net Profit
Debt
Equity
Asset
Turnover
Equity
Turnover
Inventory turnover Ratio:
1. Ratio that evaluates the liquidity of the
inventories of a company.
2. It measures how many times the
company has sold and replaced its
inventory during a certain period
3. A high ratio indicates fast moving
inventories and a low ratio, on the
other hand, indicates slow moving or
obsolete inventories in stock
ITR = Cost of goods sold
Avg. inventory at cost
0
2012 2013
PEPSICO
COCA COLA

5. YEAR
Gross Profit (In
USD Billion)
Net Sales (In
USD Billion )
Gross
Profit Ratio
Gross Profit (In
USD Billion )
Net Sales (In
USD Billion )
Gross Profit
Ratio
2013 35.23 66.42 0.53 28.36 46.7 0.61
2012 34.15 65.49 0.52 29.15 48.07 0.61
Current
Ratio
Quick
Ratio
Inventory
Turnover
Gross
Profit
0.62
0.6
0.58
0.56
0.54
0.52
0.5
0.48
Net Profit
Debt
Equity
Asset
Turnover
Equity
Turnover
Gross Profit Ratio:
1. Profitability ratio that shows the
relationship between gross profit and
total net sales revenue.
2. It is a popular tool to evaluate the
operational performance of the
business
3. Generally, a higher ratio is considered
better.
Gross profit ratio = Gross Profit
Net Sales
0.46
2012 2013
PEPSICO
COCA COLA

6. YEAR
Net Profit after tax
(In USD Billion )
Net Sales (In
USD Billion )
Net Profit Ratio Net Profit after tax
(In USD Billion )
Net Sales (In
USD Billion )
Net Profit
Ratio
2013 6.73 66.42 0.1 8.58 46.7 0.18
2012 6.18 65.49 0.09 9.02 48.07 0.19
Current
Ratio
Quick
Ratio
Inventory
Turnover
Gross
Profit
0.2
0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
Net Profit
Debt
Equity
Asset
Turnover
Equity
Turnover
Net Profit Ratio:
1. A popular profitability ratio that shows
relationship between net profit after tax
and net sales.
2. It is computed by dividing the net profit
(after tax) by net sales
3. Purpose of this ratio is to evaluate the
profitability of the business from its
primary operations
4. A high ratio indicates the efficient
management of the affairs of business
Net profit ratio = Net Profit after tax
Net Sales
0
2012 2013
PEPSICO
COCA COLA

7. YEAR
Total Liability
(In USDBillion)
Stockholder’s equity
(In USD Billion )
Debt Equity
Ratio
Total Liability
(In USD
Billion)
Stockholder’s equity
(In USD Billion )
Debt Equity
Ratio
2013 52.96 24.41 2.17 56.62 33.17 1.71
2012 52.12 22.42 2.32 53.01 32.79 1.62
Current
Ratio
Quick
Ratio
Inventory
Turnover
Gross
Profit
2.5
2
1.5
1
0.5
Net Profit
Debt
Equity
Asset
Turnover
Equity
Turnover
Debt Equity Ratio:
1. It shows the relation between the portion
of assets provided by the stockholders
and the portion of assets provided by
creditors
2. A less than 1 ratio indicates that the
portion of assets provided by
stockholders is greater than the portion
of assets provided by creditors
3. A ratio of 1 : 1 is normally considered
satisfactory for most of the companies.
Debt equity ratio = Total Liabilities
Stockholder’s Equity
0
2012 2013
PEPSICO
COCA COLA

8. YEAR
Sales (In USD
Billion )
Total Assets(In
USD Billion )
Asset Turnover
Ratio
Sales (In USD
Billion )
Total Assets(In
USD Billion )
Asset Turnover
Ratio
2013 66.42 77.48 0.86 46.7 90.06 0.52
2012 65.49 74.64 0.88 48.07 86.17 0.56
Current
Ratio
Quick
Ratio
Inventory
Turnover
Gross
Profit
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
Net Profit
Debt
Equity
Asset
Turnover
Equity
Turnover
Asset turnover Ratio:
1. Measures the efficiency with which
assets are used by a company
2. If assets turnover ratio of an industry is
0.83. It means every dollar invested in
the assets of the industries produces
$0.83 of sales
Asset turnover ratio = Net Sales
Avg. total assets
0
2012 2013
PEPSICO
COCA COLA

9. YEAR
Sales (In USD
Billion )
Shareholders Equity
(In USD Billion )
Equity
Turnover
Ratio
Sales (In USD
Billion )
Shareholders Equity
(In USD Billion )
Equity
Turnover
Ratio
2013 66.42 24.41 2.72 46.7 33.17 1.41
2012 65.49 24.42 2.68 48.07 32.79 1.47
Current
Ratio
Quick
Ratio
Inventory
Turnover
Gross
Profit
Equity turnover ratio = Net Sales
3
2.5
2
1.5
1
0.5
Net Profit
Debt
Equity
Shareholder’s equity
Asset
Turnover
Equity
Turnover
Equity turnover Ratio:
1. Equity turnover is used to calculate the
rate of return on common equity, and is
a measure of how well a company uses
its stockholders' equity to generate
revenue
2. The higher the ratio is, the more
efficiently a company is using its capital.
also called capital turnover.
0
2012 2013
PEPSICO
COCA COLA